Why a Vice President of Claims at an Auto Insurer Should Care about Medicare Compliance

Posted by Kendell Gracey on Sep 4, 2014 7:34:00 PM

Ask a VP of Claims at an auto insurer of any size what his or her top priorities are and the following items will almost certainly be included. 

-          Reducing Costs: Never has there been so much price competition in the auto insurance industry.  Because of this, auto insurers are forced to drive down costs. 

-          Effective Litigation Management: The approximately 10% of claims that are litigated account for about 80% of costs and nearly 100% of headaches.  The last thing any Claims VP wants to do is to make settlement  of a litigated claim  more difficult or complex.

-          Legal Compliance:  The most successful Claims VPs pride themselves on their compliance acumen and successes. Consistently incurring penalties due to non-compliance is more than an inconvenience.  It can mean job insecurity.

-          Decision-Making Based on Reliable Data: “Big data” has become king. More than ever before, auto insurers  are  looking for better ways to  organize, understand and report  claims data in ways that provide revenue and cost-savings opportunities.

Given these priorities, why, then, should an auto insurance VP of Claims care about Medicare compliance

It may seem to some that Medicare compliance is fairly low on the overall priority list.  However, here are important reasons why a Claims VP should ensure that Medicare compliance is an internal priority:

-          Costs: Medicare compliance can significantly increase the cost of claims involving Medicare beneficiaries.  A file involving a Medicare beneficiary typically adds 6 to 10 hours of adjusting time. In addition, Medicare liens average $5,000+ BUT usually represent a Medicare overcharge of more than 100% .

-          Litigation: Medicare compliance can add uncertainty and complexity to litigated files, with settlement of litigated cases often being postponed while the adjuster and attorney determine Medicare obligations. And time costs money and adds risk 

-          Compliance: Medicare compliance can pose  real and substantial penalty  risks. Medicare has hired a Recovery Audit Contractor to assist Medicare in assessing insurers compliance. Penalties can be substantial;  100% compliance is the only safe place to be. Is your company ready?

-          Data: Medicare compliance data can get lost in the noise, which in turn can  result in poor decision-making. Our experience  has been that most P&C carriers do not know their core Medicare compliance metrics – number of claims, costs, time taken per Medicare file, etc.

Medicare compliance experts at Flagship have had conversations with Claims VPs  throughout the country where we talk through these issues in great detail. This has resulted in Medicare compliance  services designed to address every one of the foregoing priorities, with 100% compliance as the only acceptable outcome.

If you are a Claims VP, call Flagship today so we can have this conversation with you.

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Topics: Compliance, Liability